The Dept. of Veterans Affairs construction program has been hit with more criticism, this time from the Army Corps of Engineers, which says “a transformative change” is needed in how VA manages building major new hospitals. VA also needs additional funding from Congress by Sept. 30 to keep one troubled project going, a hospital under way in Aurora, Colo., whose costs have soared well beyond its initial estimate.
At VA’s request, the Corps reviewed the Colorado project and others in Las Vegas, New Orleans and Orlando—each of which had seen costs climb and had its completion dates delayed by more than a year.
The Corps reports, which VA released on Sept. 3, contain several program-wide recommendations. They include requiring VA’s staff to receive comprehensive training in engineering and construction techniques—such as design-build, design-bid-build and integrated design and construction—and reviewing a design firm selection policy that requires one joint venture company to be located near a project site.
VA Deputy Secretary Sloan Gibson, who has been the department’s point man in tackling its construction problems, said in a Sept. 3 blog post that VA agrees with the Corps’ findings and will begin to implement the recommendations.”
Gibson noted that VA has made some “significant process improvements” in its construction program, including speeding up its change-order process and bringing projects to the 35% stage before developing budgets or schedules.
But one leading congressional critic, Rep. Mike Coffman (R-Colo.), wants stronger action. He said in a Sept. 4 statement that the report from the Corps on the Aurora project “confirms what we already knew: the VA is out of its league when it comes to construction management.”
Coffman, a member of the House Veterans Affairs Committee, said he would push for action on proposed legislation to have the VA give up management of major projects.
A House VA subcommittee approved a bill on July 22 that would shift responsibilities for managing VA projects that exceed $100 million to “an appropriate non-[VA] federal entity.” Coffman said that agencies such as the Corps or the General Services Administration could qualify.
In fact, the Corps has been assisting VA on the Aurora project since late last year.
Congress did pass legislation in June to avert a shutdown on the Aurora site. The measure, which President Obama signed on June 15, permits VA to shift $150 million to the project from elsewhere in the budget. The biggest transfer, $80.7 million, came from VA’s green energy projects.The bill raises the project’s total authorization to $1.05 billion from $900 million. But it will need additional funds by Sept. 30, to keep going beyond that date.
Of the four VA projects that the Corps studied, the one in Colorado has drawn the most recent attention. Its cost jumped to $1.7 billion from an earlier $800 million.
The Corps report on that project, dated June 5, said that “the single biggest driver of cost and schedule delays is unquestionably the fundamental mismanagement of Integrated Design and Construction methodology,” which it noted, led to a “material breach” by VA contracting officers in dealing with the project contractor, a joint venture of Kiewit and Turner.
The Corps review also faulted VA for “significant shortfalls” in the management and commissioning stage of the Colorado project and for “critical deficiencies” in baseline pricing, contracting and other areas.
On the Orlando project, the Corps said that “design choices involved elaborate finishes and architectural features which greatly exacerbated both first cost and future operations and maintenance requirements….” It also said that planning for the facility’s medical equipment “lacked specificity and forced multiple reconstructions late in the life of the project….” The Orlando medical center had its formal dedication in May.
For the New Orleans project, the Corps said that “the single biggest driver of cost and schedule delays is unquestionably the ill-informed guidance to proceed with a ‘design-to-need’ methodology and disregard approved project budget controls.”
The 1.6 million-sq-ft. project was envisioned as a replacement for a VA hospital that was hit hard by 2005’s Hurricane Katrina. Estimated at $636 million, it was to be a joint project between VA and Louisiana State University’s medical center. But VA later determined that the proposed site couldn’t accommodate a joint VA-LSU complex. The cost now is estimated at $995 million.
The Corps report on the Las Vegas hospital said that it was the most successful of the four projects it reviewed, but the Government Accountability Office told the House VA Committee in January that the project’s cost had risen 80%, to $585 million, and seen its completion date delayed by more than six years.
(A shorter version of this story appears in ENR's 9/21/2015 issue.)